The extended reach of the Port of Rotterdam SOMO Paper | February 2020 In the coming months, the municipality of Rotterdam social disruption. In addition, these projects cause will decide on ‘Connected Parties’, a new policy profound changes to ecosystems, with a resulting loss framework. In this framework, the overseas projects of of biodiversity. the Port of Rotterdam (PoR) must be assessed against PoR states that the return on investment from its the climate objectives that PoR has set for itself. overseas joint-ventures should be “significantly The starting point is a global just transition. Furthermore, higher” because of the higher risks they entail. the public interest should be broadly defined and In this way, PoR transfers the risks to the local context. should extend beyond national borders. The questions that must then be asked are where this According to PoR, international projects are important return is earned, and who pays the price for it? because they offer opportunities to strengthen If the choice is between the exploitation of natural Rotterdam’s competitive position and to generate resources with maximum profit or sustainable new revenue models. solutions for people and the environment, ensuring Whereas PoR wants to be CO2 neutral in 2050, it is returns may be decisive. involved in fossil fuel intensive port projects around The Mayor and Municipal Executive (the mayor and the world. As these investments only pay for them- aldermen) have a decisive vote in the holdings of the selves in the long term, countries remain dependent Port of Rotterdam; it can either approve or reject them. on fossil fuel companies, including the coal industry, The municipal authorities thus bear a major for decades. responsibility in safeguarding the public interest. As long as projects, both domestic and overseas, However, the council refuses to unequivocally continue to be developed with a central role for the acknowledge this responsibility. fossil fuel industry, this will only contribute further to The municipality applies the economic criteria from climate change. The costs are then borne elsewhere, the policy framework only to PoR’s investments in hard while the final bill for the climate remains the same. infrastructure, and not to other forms of cooperation, The new ports are mega projects. Although this new such as advisory services and port management. infrastructure would bring employment and new This≈is a missed opportunity as it lays the foundation sources of income to the involved countries, these for potentially undesirable developments for local projects are not without risks. They could lead to populations and for the climate. q the loss of current sources of income for the local population, as well as land expropriation and SOMO Paper 1 Introduction The Port of Rotterdam and its international activities The Port of Rotterdam is a prominent node in the worldwide web of shipping and trade routes. As the It can be seen from its international strategy that PoR largest European port and the tenth biggest in the attaches value to income from its international projects.3 world, the port – with the fossil fuel industry as its most According to PoR, foreign projects offer opportunities to important customer – currently accounts for 20% of total strengthen Rotterdam’s competitive position and thereby Dutch energy consumption. The Port of Rotterdam (PoR) to generate new revenue models. PoR distinguishes acknowledges that this must change, and has presented between the various instruments that they use in their a step-by-step plan to become a “sustainable and CO2 international activities, ranging from a more advisory role to neutral” port by 2050.1 At the same time, PoR is closer forms of cooperation (Table 1). According to PoR, involved in other countries in the development of fossil ideally there is progression in the collaboration, and fuel intensive port and industrial clusters. These port knowledge exchanges via advisory services ultimately result complexes promise economic opportunities, but involve in joint-ventures.4 In practice however, the trajectory does far-reaching ecological and social risks. not appear to be linear and the collaborations are constantly changing from closer to looser forms. The municipality of Rotterdam and the Dutch government, as the only shareholders, can influence the course of the In 2017, the direct and indirect added value of the Port of Rotterdam. The Rotterdam city council will soon be Rotterdam port to the Dutch economy was calculated at deciding on an update of the 2014-2018 Related Parties 6.2% (€ 45.6 billion).5 The importance of PoR for both the Policy Framework, in which the municipality formulates its municipality and the government can therefore not only be policies for the companies in which it has a stake. In its measured by the dividends they receive through their international strategy, PoR states: “The income from shareholdings; the port has a direct relationship with the joint-ventures in particular could become increasingly entire Dutch economy. In 2019, PoR announced that it important in the context of possibly declining income as a wanted to invest roughly € 210 million in foreign projects result of the energy transition.”2 This would compensate for up until 2025. Of this total, 74 million will be invested in a any lost income associated with making the port in 30% stake in the Brazilian port of Pecem. And while PoR Rotterdam CO2 neutral. On balance, however, little will has held 30% of the shares in Brazil’s Porto Central since change if foreign projects are developed with a central role 2014, this involvement was converted into an advisory for the fossil fuel industry. The result is simply that the costs function for the management of the port in December are borne elsewhere, while the final bill for the climate 2019. In addition, PoR owns half of the port of Sohar in the remains the same. Gulf state of Oman, and from 2016 to 2018 it cooperated with the Indonesian state-owned company Pelindo I for the The city council has an important responsibility – as well as development of the new Kuala Tanjung port on the the ability – to test its projects abroad against the same Indonesian island of Sumatra. criteria as its projects in Rotterdam. A global just transition must be the starting point, and not just in the Netherlands. The ‘energy transition’ and a ‘just transition’ are not neutral concepts; they have different meanings for different actors. For SOMO, a just transition is about the transformation of the entire system of production and consump- tion, including underlying unequal social relationships. And instead of a narrow focus on CO2 emissions, the most important principles of the energy transition are equal access, democratic control and ecological integrity. In addition, SOMO advocates a transition that takes into account past injustices, the prevention of future injustices and compensation for the most affected. This calls into question any vision of development that is based on infinite growth.6 Climate change, the scarcity of raw materials, soil depletion and water pollution through overproduction, and the additional social consequences for communities indicate the limits to growth. This requires a shift of socio-economic priorities towards prosperity that is accessible to all in a healthy environment. The goal is a society in which development is not imposed but is determined, and where value is not extracted but redistributed.7 The extended reach of the Port of Rotterdam SOMO Paper 2 Tabel 1 PoR’s international activities Instrument Countries Explanation Ascending forms of cooperation Knowledge exchange Singapore Sharing of expertise in the field of port China (Guangzhou)8 management Advisory services Argentina (Buenos Aires) Curaçao India (Gujarat) Indonesia (Jorong Borneo) Latvia(Riga) Mozambique (Palma) Turkey (Ceyhan) Brazil (Porto Central) Digital servicesn Harbour management China (Guangzhou) Cooperation Joint-ventures Oman (Sohar Port and Freezone) Joint venture (50%) Brazil (Pecem) Joint venture (30%) Based on: International Strategy of the Port of Rotterdam and the website of the Port of Rotterdam.9 Although the aim of this last collaboration was to set up PoR’s projects leave countries a joint venture with Pelindo I, this has not yet been dependent upon fossil fuels achieved.10 However, PoR is still engaged and interested in the Indonesian port project.11 This involvement happens Ports are often hubs for fossil fuel energy flows, among through the Indonesian subsidiary PT Pelabuhan Rotterdam, other reasons because of the storage and transhipment of in which PoR has a 99% stake.12 Finally, PoR provides advisory coal, gas and oil that takes place there. In addition, services to various ports in Argentina, Turkey and India, incoming and outgoing goods also lead to substantial CO2 among others (Table 1). Not only are there different forms emissions, as do the activities associated with a port’s of collaboration, but the partnerships also constantly petrochemical and energy-guzzling industrial complexes. change in form. Whereas PoR aims to become CO2 neutral by 2050, it is involved in fossil fuel intensive port projects outside of the The diagram below (Figure 1) shows how PoR’s joint Netherlands. As these investments only pay for themselves ventures are embedded in the overall structure of the in the long term, it is very likely that countries will not easily company. The ownership relationships of all international be able to change course and will therefore remain activities run through Mainport Foreign Investments BV, dependent on fossil fuel industries for decades. a subsidiary of Mainport Holding Rotterdam NV, to the parent company Havenbedrijf Rotterdam NV. Port of Coal-fired power stations and coal transhipment Rotterdam Participacoes do Brasil LTDA and PT Pelabuhan Rotterdam Indonesia also have 1% direct shareholdings PoR developed plans for a port-industrial complex in with Mainport Holding Rotterdam NV.